Risks of Importing Goods Subject to Antidumping and Countervailing Duties

Two opinions released last week by the U.S. Court of International Trade (CIT) underscore the risks that importers face when bringing in goods subject to U.S. trade remedies laws.

P.F. Stores, Inc. v. United States and Hutchison Quality Furniture, Inc. v. United States both involved importers of goods subject to the antidumping duty order on Chinese wooden bedroom furniture. Both posted duties at entry in the amount of the then-current “cash deposit” rates. However, duties for both importers’ goods were subsequently revised upward pursuant to proceedings at the U.S. Department of Commerce. Commerce then instructed U.S. Customs and Border Protection (CBP) to liquidate the entries at the higher rates.

This illustrates one of the biggest risks to importers in entering goods subject to trade remedies laws: the duties applicable at the time of importation may be revised upward, sometimes significantly, pursuant to Commerce’s annual review of producers’ and exporters’ selling prices. These duty revisions are applied retroactively. As such, an importer of trade remedies goods cannot know with certainty what its ultimate duty liability will be at the time of importation.

When CBP liquidated the goods here at the higher duty rate, both importers filed protests with the agency, arguing that the entries should be deemed to have liquidated by operation of law at the rate claimed on entry. CBP denied the protests and the importers sued in the CIT. However, rather than bring their cases as direct challenges to CBP’s protest denial, the importers invoked the court’s “residual” grant of jurisdiction.

The problem for the importers is that residual jurisdiction is only available where a plaintiff cannot and could not ever have protested CBP’s liquidation. This might be the case if, for example, a party other than the importer wanted to challenge CBP’s liquidation. But both plaintiffs here were importers, and importers that moreover had protested liquidation at the agency.

This may make you wonder why the importers didn’t simply file direct challenges to CBP’s protest denials. This brings us to the second big risk of importing goods subject to trade remedies duties. One of the prerequisites to challenging a CBP protest denial directly is payment of the duties that CBP claims are owed. Here, the antidumping duties owed on the entries were evidently higher than the importers wanted to pay.

In its opinions in these cases, the CIT confirmed that the court’s residual jurisdiction cannot be used as an “end-run” around this requirement. If the “true nature” of an importer’s challenge is that CBP incorrectly denied a protest, the importer must pay the duties before it can get into court.

Right now, both importers are probably questioning their decision to import trade remedies goods. As their dismissed actions show, the risks of trade remedies imports are high—uncertain liability at the time of importation, coupled with a “pay-to-play” condition on litigating any subsequent liquidations.

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